A federal court in California has dismissed a claim by a buyer against Sotheby’s that alleged that the auction house sold him a work whose title was clouded because Hermann Göring had once owned it. What seemed liked a interesting new theory of liability was dismissed because the buyer had agreed in advance to litigate any disputes from the sale in the United Kingdom. It is somewhat surprising that the buyer even tried.
Earlier this year, the lawsuit by Steven Brooks garnered widespread attention. Brooks purchased Allegorical Portrait of a Lady as Diana Wounded by Cupid, by Louis-Michel van Loo at Sotheby’s in London in 2004. In 2010, he tried to sell the work at Christie’s, which balked at the provenance with Göring in it and refused to sell it on consignment. Brooks alleged in his case (originally filed in California state court, but removed to the federal courts by Sotheby’s) that Sotheby’s had committed violations of the California Consumers Legal Remedies Act, section 1750 of the California Civil Code and common law fraud (by failing to disclose the Nazi provenance).
The lawsuit was therefore noteworthy as distinct from most restitution cases in which a claimant alleges that he, or his predecessor, was wrongfully deprived of a painting now in the hands of another. Instead, Brooks alleged that anything ever owned by a leading Nazi was so presumptively suspect that he would never be able to sell it because he would never be able to assure a subsequent purchaser of its good title. As a possible theory of liability, the implications of such a claim were of critical interest to all sides of the restitution issue.
The resolution will therefore leave no one satisfied. As a condition of sale, Brooks (and other bidders) agreed in advance to litigate any related disputes in the courts of the United Kingdom. This is what is known as a forum selection clause, and it is a part of the overwhelming majority of sophisticated commercial contracts (of which a successful auction bid is one). Although the terms of sale were not open to negotiation, the court noted that Brooks was an experienced auction buyer, and could hardly claim surprise.
Sotheby’s motion to dismiss for improper venue was granted, accordingly. The court was not wiling to ignore the forum selection clause as unconscionable, or violative of public policy; to do otherwise would out innumerable other such contract clauses at risk. No doubt the selection of England as the forum sealed the result; there is no indication that such a court will not apply the appropriate law under the appropriate standards.
The decision is not a ruling on the merits, but given the clear language of the forum selection clause, one does wonder why it was even brought in California. It is difficult to imagine any other result. Even without the forum selection clause, it was a UK transaction, and the jurisdiction of the California courts more broadly over such an event is an open question at best (and would provide alternative grounds for a procedural dismissal). A provocative question is thus left unanswered for now.